Incentivising 'Common Informers' – observations regarding payment of the Statutory Penalty ordered in TWU v Qantas

Introduction

The litigation following the outsourcing of Qantas’s baggage handling services at its major Australian ports in 2020 has continued through another chapter with the Federal Court’s decision on 18 August 2025 determining penalties in respect of the 1820 contraventions found to have emerged from the outsourcing decision. The penalty imposed was $90 million dollars.

This article concerns just one aspect of that decision, being the order that $50 million dollars of this penalty be paid to the party bringing the proceedings, the Transport Workers’ Union of Australia.  It is possible that the Union may also receive a portion of the balance of the penalty, the $40 million dollars, which it has been proposed will be paid into an interest-bearing trust account pending determination of that question.

That result is without precedent in the Australian industrial relations context. And it will most certainly impact the behaviour of trade unions, and the conduct of industrial relations.^[1]

Like many other aspects of the numerous decisions emerging from this litigation, at its heart the decision that a substantive portion of the penalty be paid to the union rests upon established principles; the discretion was exercised having regard to the factors which have been identified in prior cases.  But like many other aspects of the litigation, it has produced a remarkable result that is likely to have a chilling effect across businesses in Australia.

 As numerous commentators have already observed, the decision provides a strong incentive to the union, and indeed to other unions to challenge decisions of businesses, particularly decisions in regard to restructures and the introduction of change (such as AI or automation) into the workplace. Indeed, providing such an incentive was identified by the Court as one of the reasons the discretion was exercised in this way.^[2]

Context

The Fair Work Act has very wide application. Its provisions have become lengthier and more detailed in recent decades, especially since the corporation’s power in the Commonwealth Constitution has been used for its fundamental constitutional basis.^[3] More recently its scope has extended to regulating new areas of industrial relations and beyond.^[4]

Hence, there are a greater number of civil penalty provisions, giving rise to the prospect of penalty orders in a broader class of cases. Further, the maximum penalties which might be awarded for contraventions have increased regularly and substantially in recent years.^[5]

The enforcement provisions have introduced the concept of a ‘serious contravention’.  This applies in circumstances where the court determines that a person knowingly contravenes one of the civil penalty provisions or was reckless as to whether a contravention would occur.  A company knowingly contravenes the relevant provision if it ‘expressly, tacitly or impliedly authorised the contravention’.^[6]

The impact of these developments has played out in a very public way. We have seen a range of well publicised allegations of ‘wage theft’, resulting in proceedings against employers alleging widespread contraventions over lengthy periods, and a significant increase in activities of the Fair Work Ombudsman in accordance with a far more comprehensive enforcement policy including, for example, the acceptance of ‘enforceable undertakings’ from employers which are publicly available on the Fair Work Ombudsman website.

The Act contains ‘course of conduct’ provisions which enable more than one contravention to be taken to constitute a single contravention if committed by the same person and arising out of a course of conduct by that person.  In the Qantas case, a single decision to outsource the ground handling services functions affected 1820 employees.  On its face, there may have been a case that such a decision could give rise to one contravention only.  The course of conduct provisions, however, do not apply to every civil remedy provision. Importantly, they do not apply to contraventions of the general protections.  These include not only the adverse action provisions found to have been contravened in the Qantas case, but a series of ancillary provisions dealing with such things as misrepresentations relating to workplace rights and discrimination.

Finally, the evidence revealed that the TWU expended some $4.1 million dollars in legal fees and disbursements in the proceedings, and some $2.8 million dollars by reason of work undertaken by its officials concerning the outsourcing and legal proceedings. It utilised resources in communicating with its members about the proposed outsourcing and in contributing to an ‘inhouse bid’ on behalf of members. Doing these things deprived it of the ability to fund other campaigns and litigation in other areas of its coverage.

On any analysis, these costs are dwarfed by the award of $50 million dollars. 

The factors underlying the Court’s decision to award the TWU $50 million dollars

The statutory discretion as to who should receive penalties for contraventions is wide. The Court is given power to order the payment of the penalty, or part of it, to the Commonwealth, a particular organisation or any particular person.

The Common Informer

This power has existed in the Federal industrial relations legislation since it was first promulgated in 1904. It has become known in the authorities as a ‘common informer’ provision, a term going back to the times of Henry VIII to describe the enforcement of legislation by citizens, where the public authorities are unable or unwilling to do so. Such statutory provisions have frequently granted the court power to order that the common informer be paid all or part of any penalty for the contravention.

Two modern features perhaps complicate the application of this long-standing principal. First, costs in proceedings arising under the Act are to be borne by the parties themselves, other than in exceptional circumstances.^[7] There are frequent references in the authorities to an apparent inconsistency between this legislative position and the notion that the “common informer” bringing proceedings for breach of the Act should be compensated by having a penalty awarded in its favour.

That has led to a characterisation of the purpose of awarding part or all of the penalty to the common informer - giving rise to the acceptance that doing so is not to compensate that party for the costs that it has incurred in bringing the proceedings. Rather, what has been accepted as the correct view is that suing for and obtaining a penalty is ‘vindicating the law’ or ‘upholding the integrity of the awards or agreements made under the law’. These were the expressions used by Justice Gray in a case in 2008.^[8]  The payment of a moiety has also been a feature in safety cases where the prosecutions have been brought by a union.^[9]

Those expressions have been adopted in the Qantas case. What has additionally been accepted is jurisprudence to the effect that the question is also not influenced by the fact of any compensation ordered in respect of the breach. The approach endorsed is to have no regard to the nature of any compensation ordered to those suffering loss as a result of the contravention, not only in determining the amount of the penalty, but also the identity of the person to whom it is paid.

The decision then is motivated to a large extent by a recognition of the role of common informers and a desire to encourage or incentivise them.

How then does this recognition sit with the nature and objects of trade unions. Registration under the Fair Work (Registered Organisations) Act 2009 is only available to ‘genuine’ associations which are formed for ‘furthering or protecting’ their member’s interests.^[10]  And trade union rules set out the objects in connection with which the organisation was formed. In the TWU’s case, its objects include ‘to promote, foster and maintain the best industrial interests of all Members’.

Registration under the legislative scheme affords substantial rights and privileges to the union. It is not suggested that this is not appropriate, but given this role do unions sit comfortably with the jurisprudence concerning common informers. The question is why the union should be separately incentivised to undertake activities which are at the very heart of the reason for its formation, the basis of its registration under the statutory scheme and the focus of the objects set out in its registered rules?

A windfall gain

The authorities do recognise some limitation on these common informer principles. It has been repeatedly accepted that the power should not be exercised to give rise to a “windfall” for the party bringing the proceedings.

But determining the amount which would exceed that limitation is difficult, and the principles enunciated on that question are not clear.

One approach has been to exercise caution where the innocent party has already been compensated. The question has been asked whether an order for any further money amounts to a ‘windfall’?  Again, attention has been drawn to an apparent inconsistency with the legitimate intention that parties bear the own costs of proceedings under the Act. In that case, the defendant did not receive an order that the penalty be paid to him specifically because it would be a greater amount than he had already received by way of compensation for the contravention.^[11]

In a case in 2008 the full court had the following to say on this point:

“We understand a “windfall” in this context to involve an unexpected and relatively large financial benefit. Within an organisation such as the respondent, the true cost of bringing legal proceedings is likely to prove substantial if the time of all staff involved is appropriately accounted for and other costs, possibly including overheads, identified. Before a penalty could constitute a “windfall” in the relevant sense, it would need to exceed the total amount of that cost by a significant margin.”^[12]

In the Qantas case Lee J accepted that his order did exceed that threshold, by a ‘vast extent’. He said, ‘there are windfalls, and then there are windfalls’.

The order was made nonetheless, primarily on the basis of what was said in a subsequent case to the two mentioned, the Botany Cranes case.^[13] There, the Court held, in relation to a much smaller penalty, that   it ought to be paid to the applicant unless there were ‘extraordinary circumstances’.

But in Botany Cranes, the question was whether part of the penalty should be ordered to be paid to a third party on account of losses it suffered as a result of the contravention (being the imposition of a picket). The real issue in that case was not so much the notion of any windfall, but rather the identity of the recipient.

The union submitted, and His Honour accepted, that its action in bringing the case against Qantas did not involve any ‘extraordinary circumstances’ in that it was ‘entirely congruent with the purposes and policy’ of the Act. His Honour accepted that making such an order would be ‘facilitative of achievement of the objects of the Act, including protecting workplace rights and providing effective relief for persons who have been adversely affected because of contraventions’.

However, this notion of a ‘windfall’ appears to have influenced the decision to order that only a part of the whole penalty be paid to TWU.

Inaction by the Fair Work Ombudsman

His Honour noted repeatedly that the Fair Work Ombudsman had the statutory right to bring the action against Qantas and indeed to investigate before deciding to do so, utilising statutory powers to require the provision of documents and the like.

The absence of any action by the Fair Work Ombudsman placed ‘the entire burden of enforcement’ on the TWU. This was a seemingly powerful discretionary consideration motivating the order in the TWU’s favour.

There does not appear to have been any explanation as to the reasons for the Ombudsman’s inaction. Interesting questions arise as to how this factor might influence future cases.

Consider for example a case where the Ombudsman uses its powers to investigate, and decides that pursuant to its policy, the public interest does not support the taking of any legal action in relation to alleged contraventions. If in such a case a trade union subsequently brought proceedings alleging those same contraventions, it is unclear how this discretionary factor might influence the question and whether that union should receive payment of the penalty in the event of success.

Likewise, one can well imagine matters where employers self-report to the Fair Work Ombudsman and perhaps work cooperatively with the Ombudsman on rectification of, for example, underpayments to employees. It might even be the case that an enforceable undertaking is entered. What would be the position if a trade union determined, notwithstanding that having occurred, that it would bring proceedings against the employer seeking perhaps greater compensation and penalties in respect of these contraventions. Quite how this principle would impact whether the union was able to secure payment of any penalty flowing from such proceedings is unclear.

One can at least conceive of arguments suggesting that unions ought not be incentivised to bring proceedings in those circumstances. It might even be suggested that an order incentivising unions to do so is essentially undermining the activities and discretion exercised by the statutorily created regulator.

“Flat track bullies”

His Honour used this colourful expression to describe unions who might pick upon poorly resourced employers to bring claims against.

And to draw a distinction with Qantas, in a way which shows he was influenced by factors relating to the complex nature of the contraventions and the respondent’s capacity to fight the allegations in the litigation. These included that success in a litigation, particularly before discovery, was far from assured; that the litigation was commenced against a well-resourced employer with substantial assets and financial resources at its disposal and that the drain of the union’s resources by way of legal and related costs was reasonably anticipated to be highly significant.

In describing the task undertaken by the union, His Honour noted that ‘it is all well and good to enforce the law against those from whom a relief is easily obtained or against those with finite resources preventing prolonged resistance’.

There are aspects of this reasoning which also raise questions. First, the structure of the relevant provisions includes a reverse onus, once the relevant workplace right and the adverse action have been identified. The real work undertaken in the case (and the issue to which the great bulk of the evidence went) was to whether Qantas could establish, on the balance of probabilities, that it was not actuated by the alleged prohibited reason. That is a task which fell to Qantas.

Secondly, success in the proceedings arose, to a very large part, because of the discovery of a single document containing handwritten notations. The union did not seek discovery of that document. It was accepted that His Honour made orders which gave rise to the production of that document on his own motion.

The point of course is that a consideration such as this invites examination of the detail of the proceedings so that a relevant risk taken by the common informer can be analysed with some precision. No doubt this warrants some consideration in the way that employers go about the conduct of litigation. Making admissions where appropriate, proactively providing discovery, and other steps which ease the way towards an early determination, might rationally be regarded as influential in the application of this criteria.

Some thoughts on implications

This was not a case where there was a contravener, in the conventional sense, on a question of whether some or all of the penalty be paid to TWU. Qantas’ position was that it would pay the penalty in whichever manner directed by the court.^[14]

Accordingly, some of the issues that we have identified do not appear to have been raised or argued with any particular force.

It is likely, however, that the prospect of securing very large penalties will incentivise trade unions to look for and prosecute allegations of contraventions. Proceedings where they do so will inevitably involve mediation and conciliation efforts. It is most likely that discussions on the settlement of such claims will include a claim by the union that it should receive an amount itself, if the matter is to be settled, in lieu of any penalty which might be ordered to be paid to it.

An examination of some the discretionary issues mentioned above and some of the observations we have made about them might inform responses to such claims.